Medicaid Program Integrity: Background and Resources

Medicaid Program Integrity: Background and Resources October 7, 2026 (IF13326) Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS). Each state designs and administers its own Medicaid program within federal parameters. In FY2024, Medicaid covered health care services for an estimated 85 million individuals at an estimated cost of $949 billion . At the federal level, the Centers for Medicare & Medicaid Services (CMS) approves Medicaid state plan amendments and waivers. Both the states and the federal government are responsible for Medicaid program integrity activities to ensure that all federal and state Medicaid rules are followed. For further background on Medicaid, see CRS In Focus IF10322, Medicaid Primer , and CRS Report R43357, Medicaid: An Overview . This In Focus provides background information on key questions about Medicaid program integrity and identifies selected supplemental federal resources. What Is Program Integrity? Medicaid program integrity activities are those administrative activities that ensure that the state Medicaid programs, Medicaid providers, and Medicaid enrollees operate in accordance with the federal and state Medicaid laws. Often, Medicaid program integrity activities are associated with the identification and prevention of fraud, waste, and abuse. While these are core program integrity activities, program integrity also encompasses additional components, such as oversight of the Medicaid program and identifying improper payments and overpayments. Program integrity activities also include measuring improper payments through the Payment Error Rate Measurement (PERM) program. An improper payment is "any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements" ( 42 C.F.R. § 431.958 ). CMS estimates that most improper payments ( 77% in FY2025 ) are the result of insufficient documentation ( e.g. , failing to submit documentation for a Medicaid enrollee who is eligible for the medical service) rather than fraud or abuse. Additional program integrity activities include oversight of state Medicaid agencies, managed care entities, health care providers, and Medicaid enrollees to ensure that federal and state Medicaid laws are being followed. The total amount of Medicaid fraud is unknown. State Medicaid Fraud Control Units (MFCUs) reported recovering $2 billion from criminal and civil cases in FY2025. CMS reported that program integrity activities for Medicaid and the Children's Health Insurance Program (CHIP) saved the federal government $1.5 billion in FY2024. Definitions of Fraud , Waste , and Abuse The words fraud , waste , and abuse are often connected in one phrase, but these are three distinct concepts. According to CMS , "The difference depends on circumstances, intent, and knowledge": Fraud is the "intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person" ( 42 C.F.R § 455.2 ). Waste has been described as "overusing services or other practices that directly or indirectly result in unnecessary costs to any health care benefit program. Examples of waste are conducting excessive office visits, prescribing more medications than necessary, and ordering excessive laboratory tests" ( CMS ). Abuse is "provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to the Medicaid program, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care" ( 42 C.F.R. § 455.2 ). Who Is Responsible for Program Integrity? Medicaid program integrity activities involve a multifaceted approach including multiple federal and state agencies. Federal Program Integrity Activities The federal agencies involved in Medicaid program integrity include CMS, the Department of Health and Human Services' Office of the Inspector General (HHS OIG), and the Department of Justice (DOJ). The federal government oversees states' administration of their Medicaid programs, audits Medicaid programs, administers the PERM program, and investigates and prosecutes cases of Medicaid fraud. CMS administers the Medicaid Integrity Program, which audits and monitors state Medicaid programs and supports state program integrity efforts. HHS OIG has broad program integrity enforcement, audit, and evaluation authority for HHS programs, including Medicaid. DOJ investigates and prosecutes Medicaid fraud cases and coordinates federal, state, and local law enforcement. State Program Integrity Activities State Medicaid programs are also required to conduct several program integrity activities. States' program integrity responsibilities include screening providers and suppliers before they enroll in state Medicaid programs. States are also required to operate MFCUs, generally through state attorney general offices. MFCUs are responsible for investigating fraud as well as patient abuse and neglect in facilities that receive state Medicaid payments. States are also required to contract with recovery audit contractors (RACs) "for the purpose of identifying underpayments and overpayments and recouping overpayments." In addition, states with Medicaid managed care are required to conduct independent audits of the managed care financial and encounter data. What Federal Sources Provide Medicaid Program Integrity Information? Below are selected federal resources that provide information about Medicaid program integrity. S tate Medicaid websites may have additional resources. Centers for Medicare & Medicaid Services (CMS) CMS has multiple initiatives that provide information on program integrity efforts. The Medicaid Integrity Program reports on its oversight and education activities, including within: the Comprehensive Medicaid Integrity Plan , a nnual r eports to Congress on Medicaid and Medicare p rogram i ntegrity p rograms , and s tate p rogram i ntegrity r eviews . The Medicaid Federal Policy Guidance database includes CMS guidance to states on the implementation of laws, policy issues, and technical assistance. Users can search by topic, such as program integrity . " Crushing Fraud, Waste , & Abuse " profiles CMS initiatives such as the Fraud Defense Operations Center (also known as the Medicaid Fraud War Room) and Medicaid High-Risk Services Spotlights . The CMS Newsroom has press releases on program integrity initiatives. Users can limit search results using the " fraud, waste, and abuse" tag . Department of Health and Human Services, Office of Inspector General (HHS OIG) Among its program integrity responsibilities , HHS OIG conducts Medicaid audits, excludes providers from the Medicaid program, and exercises oversight of Medicaid, including state MFCUs. HHS OIG has issued numerous Medicaid reports . See also " Enforcement Actions ," " Recommendations ," and " Top Unimplemented Recommendations " limited to Medicaid. The HHS OIG page on MFCUs provides information and resources on program requirements and standards (e.g., statutes and regulations , policy guid ance ), MFCU activities and OIG oversight (e.g., MFCU reports, OIG annual reports , state enforcement actions , and MFCU certification letters ), and other resources (e.g., directory of MFCU directors ). Medicaid and CHIP Payment and Access Commission (MACPAC) MACPAC is a nonpartisan legislative branch agency that provides policy and data analysis. Resources include: " Medicaid Program Integrity " (April 2026), which describes measures of fraud, waste, and abuse; summarizes the program integrity roles of federal agencies, states, and health plans; and discusses key issues in managed care and in federal investigations, assistance, and oversight; and " Key Legislative Milestones and Statutory Provisions in Program Integrity . " Department of Justice (DOJ) Among its program integrity responsibilities , DOJ investigates and prosecutes Medicaid fraud cases and coordinates federal, state, and local law enforcement. The DOJ National Fraud Enforcement Division's Health Care Fraud Section includes examples of enforcement actions and strike force operations . DOJ p ress releases highlight examples of Medicaid fraud cases. HHS-DOJ Health Care Fraud and Abuse Control Program (HCFAC) Jointly directed by the Attorney General and the HHS Secretary, HCFAC coordinates federal, state, and local health care law enforcement activities. HCFAC annual reports highlight significant investigations, activities, and monetary results. Government Accountability Office (GAO) GAO is a nonpartisan legislative branch agency that examines federal programs. The GAO High Risk List is updated at the start of each new Congress and has "programs and operations with serious vulnerabilities to waste, fraud, abuse, or mismanagement, or in need of transformation." " Strengthening Medicaid Program Integrity " is on the most recent list (February 2025). GAO publishes reports and testimonies on various topics, including Medicaid program integrity. Users can search by keyword and filter by date, topic, or agency.

Related documents

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